Why does the price of gold go down?

Discussion in 'Commodities Forum' started by wulfman, Jul 29, 2014.

  1. JR Ewing

    JR Ewing Super Moderator Staff Member

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    I never say "always". :D

    It's great that we're finding and tapping into more and more oil and gas here in the US. Still, the ME has much bigger reserves than we do as far as we know to this point.
     
  2. Allison2021

    Allison2021 Well-Known Member

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    I believe the price of gold goes up and down because of demand. When the economy is not doing well people want to put their money in a safe investment. Gold, oil, and diamonds are safe investments. When the economy does better then you could cash in on your investment and make a profit.
    I can hardly believe how much the price of gold and oil has dropped. I think that should indicate that our economy is getting into a surge.
     
  3. JR Ewing

    JR Ewing Super Moderator Staff Member

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    Most people will have a bit more disposable income and probably spend more money on other things now that gas is cheaper for the time being.
     
  4. ormaybeso

    ormaybeso Well-Known Member

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    That's odd, I figured the price of gold keeps rising over time. So as the first reply mentioned, could it really be the strengthening dollar. I remember looking at Bitcoin charts and seeing an altcoin appear to go down while maintaining a 5% increase, which I found odd. I later learned that it's because Bitcoin rose in value. Would gold do the same then?
     
  5. JR Ewing

    JR Ewing Super Moderator Staff Member

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    Many if not most experts believe it will go up longterm.
     
  6. turt

    turt Guest

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    The value of our currency always goes down. So the gains are never huge... I think one of the best aspects of gold is that it's not tied to a specific currency. If the US dollar is worthless, you can still trade your gold for any other currency or a lot of dollars...
     
  7. AtlantaSports

    AtlantaSports Senior Investor

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    I actually had absolutely no idea that the dollar was not backed by gold anymore. This is definitely going to sound like a dumb question, but what is it backed by currently?
     
  8. JR Ewing

    JR Ewing Super Moderator Staff Member

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    "The full faith and credit of the United States Government" - whatever that's worth these days. :D
     
  9. AtlantaSports

    AtlantaSports Senior Investor

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    Haha, I am pretty sure that the value of that is extremely debatable at this point :p
     
  10. petesede

    petesede Guest

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    The value of gold is more determined by inflation ( or the value of the dollar) than the actual abundance or uses of gold the metal. In high inflation times, or if people are expecting inflation to go up sharply, people will buy gold with dollars.

    While the federal reserve technically stopped backing US dollars with gold about 50 years ago... the actual commodity marketplace basically does the same thing. Gold acts as a buffer that prevents the US dollar from swinging too widely over a short period of time. As the value of the US dollar changes, investors buy or sell gold which helps stabilize the dollar.
     

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